Morgan Stanley: `Regulators Need the Blockchain Master Keys´

Investment bank Morgan Stanley stated in a report they have been receiving many calls from people interested in investment opportunities with bitcoin and other cryptocurrencies. However, the bank implied bitcoin and its ecosystem would need to submit itself to regulation prior to seeing any future growth. They want regulators involved so the blockchain can be `adequately´ controlled. “Regulators are looking to have a master key so all transactions are visible to them,” the bank noted.

The investment bank also mentioned they have no idea why bitcoin and other cryptocurrencies are growing so quickly. They believe rampant speculation on crypto markets have driven the price upwards for no clear reason. They said: “It is not clear why cryptocurrencies are appreciating so rapidly (apart from the appreciation itself drawing in more speculation against a potentially inefficient ability to sell).”

A Market Watch article, which quoted Morgan Stanley, further stated the blockchain is a “centralized” ledger that records all transactions and that the investment bank did not specify what regulations would be necessary. They simply announced that regulations and controls should be put into place.

Morgan Stanley’s Interest in Permissioned Blockchains

Part of these regulations could involve Morgan Stanley’s acceptance of “permissioned blockchains,” which they wrote about last May in a blog titled “banking on the blockchain.” They would create controlled blockchains only authorized individuals could access. This would allow them to maintain the prominence of their banking industry and adopt streamlined regulations while leveraging blockchain technology.

In the post, they referenced another article, saying:

Permissioned blockchains—a digitally distributed ledger where authorized users can record, process and verify transactions—to streamline their own operations and costs…

Satoshi Nakamoto’s Original Vision

This may indeed streamline their costs, but it would likely also sacrifice Satoshi Nakamoto’s original intention of blockchain technology, which was to put banking inside the hands of the individual.

In the White Paper, Satoshi said, “Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.”

This is what Satoshi’s envisioned, but it remains to be seen whether Morgan Stanley’s idea of the master key in blockchain technology will trump the idea of bypassing third parties. Many in the ecosystem still hope Satoshi’s original vision will prevail in the end.

Do you think the banks will be able to effectively regulate bitcoin and create permissioned blockchains? Share your thoughts below!